Available inventory of single family homes on the market is rising quickly each week now. What does that mean? Is it a sign that the market is turning? Should we be worried? These are real signals and legitimate questions so let's take a look at the data.
Every week Altos Research tracks every home for sale in the country. We analyze all the pricing, supply and demand, and all the changes in that data and we make it available to you before you see it in the traditional channels. I’m Mike Simonsen, I’m the CEO of Altos Research. Here’s what we’re looking at for the week of May 9 2022.
Inventory climbed another 4.5% this week. That’s a big change. Inventory is climbing much faster than last year at this time. In fact, at this pace it looks like by next week we’ll post the first year over year inventory gains. 305,000 single family homes unsold available on the market right now. With 80,000 or so getting listed and another 80,000 going into contract, we read that as less than 4 weeks of inventory. As this market takes its foot off the gas, it’s still racing down the freeway. We have a long way to go to get us back to normal speed. But the early stages of that change are starting.
Home prices meanwhile are up to a new record again this week. The median price of single family homes in the US is now $432,000. Prices will likely reach their seasonal peak in the next couple weeks at about $440,000. Most years the price of the active market peaks right at the end of May. Deals get done in June and July and the traditional headlines reporting transaction prices will still be reporting this strength in August, September, and October. It’ll be a fun time in this data in the next few months as the real-time view shows us how the market starting to move a tiny bit slower, but many of the headlines still report massive new home price record highs. Here’s hoping the people making interest rate policy decisions know which numbers to watch to determine if rate hikes are having the desired effect.
To be clear, we can measure a slightly slowing market in the available inventory numbers but there are no signs in the price changes slowing yet. Because it’s May, it would actually be very unusual to see those signs yet. These last few weeks of May are very reliable price gain weeks and that’s proving true again this year. We’re at 10% year over year price gains right now and that looks likely to hold for the year.
The median price of the newly listed properties is also staying strong each week. The new listings prices haven’t plateaued yet. The price of the new listings rose this week to $429,000. Normally by this time of the year the new listings prices have plateaued. Rising rates have not scared off enough buyers to have any weakness in prices out there yet. Plenty of bidding wars on ultra tight supply is still the rule, even as we get a few more homes on the market. Remember that we still have fewer than half the number of homes available than we did just two years ago. We’re still very much in crisis mode. Every bit of increased inventory is a welcome sign of a return to normalcy.
In the immediate sales tracker we can also see this slight cooling. 28,000 of the 105,000 new listings went into contract immediately this week. Over the last six weeks, immediate sales have slid from 33% of the new listings to 27%. That was a third of all the new listings going into contract essentially immediately after listing. Now it’s down to 27%. This subtle change can be difficult to detect at the local level. But at the national level we can see just slightly less intense bidding.
Last year at this time we had slightly less inventory hitting the market and more of them going into contract immediately. That’s why we have inventory building right now. The low point for immediate sales last year was the Fourth of July week, but then demand picked back up in the second half of the year. Which surprised me at the time. I don’t expect that to happen this year. If I'm correct, then this will imply fewer bidding wars and a little return to sanity in the market.
As a result of these changes we’re adjusting our inventory projection up. We’ve had several weeks of bigger than expected inventory gains. We’re already up 22% from the low point in March. Now it looks like it could be next week when we cross over to year on year inventory gains for the first time. Inventory is rising quickly now, and we also expect inventory to stay elevated later in the year. The curve for 2022 is echoing the curve from 2018, the last time we had rising rates. Hopefully end the year with 400,000 single family homes available.